by Michael Riehn
I wish the Cardinals ownership would get off their fat wallets and do some… (voice from a distance is inaudible) What is that you say? (he turns away from they keyboard) They just spent 17 million a year at 7 YEARS for Matt Holliday? Wow.
Wow is a good place to start when discussing the deal the Cardinals gave Matt Holliday. The ownership has done their part, now it’s time to roll the dice and see what happens.
As first reported by Sports Illustrated’s Jon Heyman on Twitter, the Cardinals will be paying the perennial All-Star $17 million a year for 7 years with an (unattainable) option for an 8th year at $17 million. He has to finish in the top 10 of the MVP voting in year 7 (as a 37 year old) to reach the 8th year option. That’s probably not going to happen, and is in the contract so Holliday’s agent , Scott Boras can say he has a player option for year 8.
ESPN’s Buster Olney is reporting that the Holliday’s contract in 2010-’16 will actually be $15 million a year annually (present day value) with another $2 million a year in deferred payments (for $17 million total). He’ll also have a 2017 buyout for around 1 million dollars, for a total contract value of $120 million.
My opinion is that the Cardinals paid what they needed to. Did they overbid a little bit? Probably, but not egregiously so. Many people are saying they bid against themselves, but I don’t buy it. There was always the option of Holliday changing demands to a 1-2 year contract for over 20 million. In this scenerio we would have been bidding against the Yankees and Red Sox, and our chances would have shrunk dramatically. Boras had a few tricks up his sleeve and the Cardinals handled the process well (in my opinion).
Would I rather have Jason Bay and his contract? Actually, no. Matt Holliday is a much better player (offensively AND defensively) and will probably age well in comparison.
Playoff Chances and Needed Parts
This improves the Cardinals playoff chances dramatically. The central division has probably become worse this off-season, and in some metrics I’ve seen, Holliday’s signing improves our odds by almost 25%. With the health of the team as a major caveat, the Cardinals should be the division favorites for the next 2-3 years (at least).
With all of the Cardinals dead money easing off of the payroll this year (Greene, Glaus, Wellemeyer, etc.), the flexibility was/is there for 2010-11. They will be paying around $90-$95 million in salaries for 2010 with only a few needs.
The club must find a left handed bat off the bench (Ryan Church?), 5th starter (John Smoltz?), third baseman (Joe Crede?), backup centerfielder (Ryan Church?) and possibly a reliever (Kiko Calero?). Some of these spots will have to be filled from within (David Freese, Joe Mather, Allen Craig, Jamie Garcia, Fernando Salas, Jon Jay?), but you may see another short term contract on a veteran player or two.
The Future Problems
Things will become difficult in 2012. The Cardinals will have a lot of money tied up in their top stars, and many of the “cost controlled” players right now (Schumaker, Rasmus, Ludwick, Molina), will be hitting free agency or arbitration. They won’t be able to keep all of their core players without a significant increase in payroll at this time, and you won’t see any big money free agents (aside from Albert) for awhile. The Hot Stove League will be pretty cool for the Cardinals over the next 5 years.
So What is Holliday Worth?
The best way I can show you what Matt Holliday is worth is through a statistic called Wins Above Replacement (WAR). The definition of WAR can be found at Beyond the Boxscore, but in summary
WAR relies on counting stats (HRs, 2Bs, etc.) to be translated into rate stats (OBP, wOBA) and then combines these factors into value stats. The great thing about WAR is that it takes into account a player’s value both at the plate and in the field, adjusting it for position (left field/ 1st base bad, shortstop centerfield good) and park (St. Louis is virtually neutral, but Colorado is not), and compares it to a replacement player.
They key to the definition is the replacement player. It is roughly someone who could be called up from the minors for league minimum and do the same job (0 WAR). How much is the minor league player worth compared to Matt Holliday? Chuck Brownson from the Hard Ball Times and Viva El Birdos wrote a nice article with a pretty spreadsheet on Matt’s annual value over the life of the contract via a projection system called CHONE:
|Holliday’s projected WAR through 2016|
|Year||WAR||$ Value/Year||Total Value||Team’s Annual Surplus|
|2010||4.6||$4.4 M||$22.88 M||$5.88 M|
|2011||4.1||$4.7 M||$19.30 M||$2.30 M|
|2012||3.6||$5.0 M||$18.14 M||$1.14 M|
|2013||3.1||$5.4 M||$16.71 M||-$0.29 M|
|2014||2.6||$5.8 M||$15.00 M||-$2.00 M|
|2015||2.1||$6.2 M||$12.96 M||-$4.04 M|
|2016||1.6||$6.6 M||$10.57 M||-$6.43 M|
|Total||21.7||—-||$112.91 M||-$6.09 M|
These are projections (or educated guesses) so anything could happen, but the Cardinals have to use projections to figure out a player’s worth when attempting to sign them. We might as well use what we have to evaluate the deal. The caveat is that the Cardinal statistical system is probably better than anything freely available to the public. I bet their system shows he is worth it.
The table shows that CHONE thinks Holliday will be worth roughly what the team is paying (though 2015 and 2016 will probably be difficult to stomach).
The Value of Elite Talent
Some people will say that paying Holliday what he is worth is neither good nor bad (it’s just average), but I disagree. I think there is a value in elite talent that is difficult to quantify. For instance, would you rather have Lohse and De Rosa or Holliday and Allen Craig on the roster? We’ll have both options, but the dollar values are roughly the same.
Holliday/ Craig will be making slightly less each year (over the next 2 years) and will help a team out much more effectively than those two players. The Cardinals have a good chance to develop talent that replaces Lohse and De Rosa (in the next 2-3 years). They have next to a zero chance (barring injury) that anyone from the minors will preform like Holliday during that same time period. He’ll be in decline after that, but could still be a very valuable player (worth more than De Rosa’s WAR estimations in 2010-11 for instance).
All systems are pretty conservative. They have to take into account injury and the history of how players age, but there is some cause for optimism. Holliday’s WAR value over the last 4 years was 4.4, 8.0, 6.3, 5.7. He probably won’t ever match his career year again, but he has a decent chance at 5.7-6.3.
If Holliday can manage to duplicate what he did last year (5.7), for a year or 2, and age less dramatically than the conservative estimates, we could see a surplus in value that would make this contract a good one. Of course if Holliday gets injured in year one, or hits like he did in the beginning of 2009 for the A’s, we’ll have our own Barry Zito, Alfonso Soriano or Vernon Wells contract that will hamstring the Cardinals for years.
As a fan, you have to be optimistic about the signing. Anything can happen and you can’t dwell on the negatives. As an added bonus, this should also help us with negotiations for a certain first baseman who’s contract is up after 2011. Anything that gives us a better chance to keep our future Hall of Famer in Cardinal red for life, is a major plus.
What do you think?